Decision Making in Tough Times
Right now, as I write this article, the G20 leaders are meeting in the hope of re-designing a better and more robust financial system. Individually and professionally many of us are reviewing the decisions we make about spending, investing and earning money. Our decisions are likely to have changed dramatically from 18 months ago. New and rapidly changing information has appeared. It is causing us all to re-think, at minimum, our tactics but probably also our fundamental financial strategies.
I was reminded of a comment from a senior leader about decision making: “Don’t be afraid to change your mind if the known facts change. Willingness to change your mind is a strength. The problem is when people have their mind made up by the last person they spoke to.” This gets to the heart of making good decisions – do you have a good decision making process?
It is an easy temptation in periods of rapid change to get into a cycle of making decisions based on the “latest news”. Responding quickly may well be necessary at times. It can give a comforting sense of “doing something” in the crisis. But if we are simply responding to the latest piece of information, with no clear decision framework around it, then we may well risk doing the proverbial jump from the frying pan into the fire.
Research shows that the elements of good decision making always include three critical aspects in this order:
Whether you are making an individual decision or a decision on behalf of a group, you will get consistently better results by applying this process. It becomes even more important when several or many people are involved and affected by the decision. Decision-makers will get better outcomes if they involve the right people, take appropriate time to listen to multiple perspectives and weigh up the alternatives and risks against clear objectives.“But I may not always have time for that” I hear some of you cry! It’s true - on occasion we need simply to act. But it’s also true that if we stand back and take a little reflective time, we often do have time to think through a decision with care. Going through the process of checking/confirming the objectives, understanding alternatives and then assessing risks and benefits does not need to be protracted – it just needs to be done consistently. In tough times, we can all benefit from going back to proven ways to make better decisions.
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